Thursday, April 21, 2011

Tech Jobs, Tech Stocks: Boom-Boom-Boom-Boom

1. USA Today article "Tech Boom Like It's 1999" -- "Tech workers like Mersy are coveted commodities as the high-tech industry undergoes its biggest hiring binge in more than a decade. Not since the dot-com bubble of the early 2000s has competition been so fierce. Would-be employees are being enticed with fat contracts, hefty bonuses and such freebies as iPads, meals, sporting events and shuttle services. These and other perks are in play to hook top talent in engineering, social media, website development, product design and management.

The jump in tech hires highlights what some economists see as a bounce-back in the $805 billion U.S. tech industry that could eventually make a dent in the national unemployment rate of 8.8%. A surge in tech hires in California could portend an upturn for the overall U.S. economy, says Jesse Harriott, chief knowledge officer at online job site Monster.com."

2. Apple sells 18.65m iPhones in 2011 -- "Apple has revealed it shipped an enormous 18.65m iPhones in the first three months of 2011, representing a 113 per cent improvement on this time last year. The colossal tally is the highlight of the second fiscal quarter earnings report in which Cupertino boasted of a record net profit of $5.9 billion and income of $24.67 billion between January and the end of March."

MP: The chart above helps to illustrate the tech boom and bull market for technology stocks, showing that the NASDAQ-100 Technology Sector Index has almost doubled in the last two years, compared to a 60% increase in the S&P500 Index.

10 Comments:

the nasdaq was also down a great deal more than the S+P from the 2007 peak to the 2009 trough.

it's easier to show big % moves when you were down more.

if we look at the nasdaq today as a % of 2007 peak, we get 2809/2861 = 98% vs the S+P at 85%. that's a much smaller difference. if we use S+P ex financials, most of that gap goes away.

this may be less of a tech boom that a stagnation of the fininace companies. the S+P 500 is up 30% from august (when the last rally started) despite being 20% financials which (using the BKX) are not up at all over that period.

that implies 38% growth for the rest of the portfolio vs 34% for the nasdaq over the same period.

The U.S. and world economy are now sustaining growth again so, Initial Public Offerings (IPOs) will finally have traction.

2011/2012 will see an even greater boom for market evaluations in tech as Groupon, Facebook, Twitter and others go to market offerings. This should drive tech ETFs and other tech composites, as well as the S&P, higher.

The earnings results from Apple, F5 Networks, Yahoo and IBM are very encouraging. These co.s represent both consumer and enterprise management tech stocks.

BTW, as options for gold and silver on expire on April 26, liquidity could move to equities, as traders may take big profits.

Tech is certainly booming, but it's a frustrating mix of worthwhile and fluff. The worthwhile are the segments actually making money, mostly mobile hardware and servers for them to connect to. The fluff is facebook/twitter/groupon, the social crap that mostly doesn't make money and where whatever money is being made is being extrapolated out to nutjob valuations. It looks like tech investors learned nothing from the last bubble, in fact they seem to be hoping for another irrational bubble with the dumb ideas they're funding. Let's see if retail investors are any smarter this time around, as that's the greater fool they hope to offload their stock to once they IPO. I'm not optimistic that anybody has learned, which means they will have to get burned again.

The U.S. and world economy are now sustaining growth again so, Initial Public Offerings (IPOs) will finally have traction.

While there has been pent up demand that has shown up in TVs, iPods, smart phones, Macs, PCs, etc., there is no sustainable boom on the horizon. Most of the increases have come from the effects of QE2 and foreign equivalents as newly printed money went into equities as a way to hedge a USD decline. Eventually the game will come to an end as the reality of a massive shadow inventory in housing and weak income growth become evident.

Let's see if retail investors are any smarter this time around, as that's the greater fool they hope to offload their stock to once they IPO. I'm not optimistic that anybody has learned, which means they will have to get burned again.

I would not bet on rationality and memory winning out. The idiots who make bets on the fluff may yet bring valuations down for everything.